Which of the following statements represents a correct and sequentially accurate economic explanation?
A) If government purchases rise, total expenditures on goods and services rises, and the AD curve shifts leftward.
B) If government purchases rise, total expenditures on goods and services rises, and the AD curve shifts rightward.
C) If consumption rises, total expenditures on goods and services rises, and the AD curve shifts rightward.
D) If consumption rises, total expenditures on goods and services rises, and the quantity demanded of Real GDP rises.
E) b and c
E
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Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate ________ and the quantity of loanable funds ________
A) falls; decreases B) falls; increases C) rises; increases D) rises; decreases
Which of the following explains why purchasing power parity does not completely explain long-run fluctuations in exchange rates?
A) Most countries do not impose barriers to trade. B) Some goods and services produced in any country are not traded internationally. C) Consumer preferences for goods and services across countries are very similar. D) Most countries have free markets with little, if any, government regulation.
Which of the following statements is most accurate regarding who benefits and loses from establishment of a minimum wage above the market clearing wage?
A) Individuals who obtain jobs benefit because they earn a higher wage, but some individuals lose because employers will not hire them at the minimum wage. B) All workers benefit equally from the establishment of the minimum wage because just as many workers as before remain employed, and all earn the higher minimum wage. C) All employers benefit equally from the establishment of the minimum wage because they are able to hire fewer workers at a lower wage. D) All employers lose because they must pay the higher minimum wage to the same number of employees as they did before the minimum wage was established.
"Countries usually experience substantial net economic gains from joining trade blocs." Do you agree or disagree with this statement? Why? In your answer, include discussion of the roles of trade creation and trade diversion. Also include discussion of other gains or losses that can arise in a country that chooses to join a trade bloc.
What will be an ideal response?